Buying a term insurance plan is one of the simplest ways to get your family’s financial future secured and prepare them for your absence. Term life insurance benefits range from its cost-effectiveness to bringing a secure future for your family, among other things. More and more people in India are opting for a life cover and term insurance is emerging as one of the popular choices, and for good reasons.
Benefits of Term Insurance
If you have ever wondered what term insurance is and what it has to offer, here are 11 benefits of term insurance that may help you understand the plan better.
1. Life Cover
One of the most obvious term insurance benefits, as with any life insurance, is the life cover aspect. One rarely grasps the significance of having such a source of financial support, unless they face a certain loss. The life cover offered by a term insurance plan is a way to get financial support for your loved ones, so the grief of your absence may hit them a bit more softly.
2. Simple Design
Not everyone is savvy with jargon when it comes to matters of money. But that does not mean they have to miss out on the options that provide them with financial security. One of the key advantages of term life insurance is its simple design that can be grasped by most people. The plan is structured in a way that it can be seen as no-frills. This can be a factor that customers consider when making such important decisions.
3. Cost-effective Structure
Since this plan is no-frills, which means it does away with all the unnecessary features and retains life insurance as a key benefit, it manages to be relatively more cost-effective as compared to its counterparts. Hence, you can get a significant sum assured amount at a reasonable premium. This term life insurance benefit is one of the reasons why it is an easy choice for many.
4. Accessibility
There are three key aspects of term life insurance plans that make them accessible – price, ease of purchase, and simplicity. Let’s break this down.
The simple structure and low price of these plans, which are significant benefits by themselves, are interconnected. To some extent, they make each other possible. Besides this, a key term life insurance benefit is that it can be purchased online as well as offline, in a few simple steps.
All these factors make term life insurance plans accessible to an array of demographics, including people in remote areas, people who are economically challenged, individuals with are not tech-savvy, and more.
5. Scope to Customise
Term life insurance benefits are not limited to their core design. A key advantage you may notice when opting for term life plans is that the scope of what your policy offers can be enhanced by adding riders to your policy or choosing a term plan type that is more suitable to you.
Riders are add-on features for your term life insurance plan. Their availability may vary across insurance providers.
Some of the common term insurance riders are:
- Income benefit
- Accidental death benefit
- Accidental permanent disability benefit
- Critical illness
Most of these riders can be added to any type of term plan you may purchase, subject to availability.
Here are some of the plan types available in India:
- Level term insurance plan
- Term insurance with return of premium
- Increasing term insurance
- Decreasing term insurance
- Convertible term insurance
6. Tax Exemptions**
If you are a taxpayer under the old tax regime, you may be able to claim an exemption for the premiums paid into your life insurance plans. You may consult your tax advisor or a financial expert to understand how you may fit this into your tax deductions.
Furthermore, the benefits received from your term plan may also be eligible for tax exemptions. So, as per prevalent tax laws, the beneficiary of the policy who receives the benefit may be able to claim an exemption. This allows you as well as the beneficiary to rest easy about their financial obligations and focus on building stability.
7. Premium Payment Options
While it may not seem like a significant benefit of term insurance at the first glance, having multiple payment options for your premium can help you stay on track when it comes to keeping your policy in force. Loss of this life cover through policy lapse due to non-payment of premiums can lead to not only financial issues for your dependents in the future, but it may also lead to loss of the premiums you may have paid thus far.
Usually, the payment options available for term life insurance plans are monthly, quarterly, or annually. You can also opt for a single premium payment option for your term insurance plan. These options may vary based on the plans chosen. It is advisable to check the policy brochure to know what options are available with your plan. You may also use a term insurance calculator to get premium estimates for the sum assured selected, according to the payment frequency chosen.
8. Easy to Purchase & Maintain
Today, term life insurance plans are easily available online as well as offline. Except for a health check-up, which is mandated on a case-by-case basis for prospective policyholders, the purchase process for these policies is relatively hassle-free, be it online or offline.
When buying these online, the process can be completed in a few steps, provided you have the right documents ready at hand, and can make the payment. On the other hand, when buying these policies offline, you may complete the process yourself or seek the assistance of an insurance agent.
Since these life insurance policies are not market-linked, you do not have to worry about maintaining them. The only action you may require on your end is regular premium payments and updating policyholder and nominee details as and when necessary.
9. Flexible Duration
Term insurance plans offer coverage for anywhere between a duration of five years to forty years. This allows you to utilise this plan as a life cover for the long run until you have fulfilled some of your key responsibilities. On the other hand, you may also use this plan as a short-term cover to support your liabilities, such as a personal loan or a car loan, so your dependents would not have to deal with the burden.
10. Lesser Worries About the Future
The uncertainties of the future are what one ought to stay prepared for, even though one may hope and plan for the best. While it may be almost impossible to fulfil the loss of a person from your life, it is easier than you think to alleviate the financial burden they may leave behind in their wake. One of the most significant benefits of term insurance plans is that they may allow you to worry less about the financial future of your family.
11. Return of Premium Option
Despite all the benefits of term insurance that are available, a concern that prospective policyholders often have is that there are no maturity benefits to be earned from this policy. While this is true for level term insurance plans, you may opt for the return of premium option to get your premiums paid in return.
How Can Term Insurance Safeguard Your Family’s Future?
The various benefits of term insurance can help your loved ones in myriad ways.
Income Replacement and Living Expenses
One of the most significant benefits of term insurance is its ability to replace lost income. The death benefit ensures your family can maintain their standard of living and cover daily expenses, household bills, and essential needs, without financial strain.
Debt Protection and Loan Clearance
Term insurance plans provide much-needed protection against outstanding liabilities. The coverage can clear home loans, car loans, credit card debts, and other obligations. It prevents your financial burdens from being passed on to your family and allows them to retain important assets.
Education and Future Planning
The advantages of term life insurance extend to securing your children's future. The payout can fund higher education and other long-term goals. It helps ensure your children's aspirations remain achievable even in your absence.
Emergency Fund and Medical Expenses
Term insurance benefits come with the possibility of creating an immediate financial cushion for unexpected expenses in your absence. The payout can cover medical emergencies, home repairs, or other unforeseen costs that might deplete your family's savings.
Estate Planning and Wealth Transfer
Term insurance plans allow for smooth wealth transfer to the next generation. The death benefit provides immediate liquidity to handle estate taxes and settlement costs. It ensures your heirs receive their inheritance without financial complications.
You can take the help of a term insurance premium calculator to select adequate coverage for your loved ones. By doing so, you create a financial legacy that preserves your family's quality of life and provides peace of mind with the knowledge that their future is protected.
Why You Should Purchase a Term Insurance Plan Early in Life
While the benefits of term insurance are unparalleled, opting for it early on in life may help you make the most of its offerings:
Lower Premiums and Long-Term Savings
One of the many advantages of term life insurance purchased early is the substantial cost savings. Insurance companies offer lower premiums to younger applicants due to their lower mortality risk. These premium rates remain locked in throughout the policy term, which results in substantial long-term savings.
For example, a term insurance plan purchased at age 25 can cost considerably less than the same coverage purchased at age 35. This efficiency makes higher coverage more accessible. It also ensures you get maximum term insurance plan benefits for your premium amount.
Extended Coverage During Critical Life Stages
Purchasing term insurance plans early ensures protection through your most financially vulnerable years. This coverage can span across your life’s milestones, including marriage, home ownership, childbirth, and children's education. These are the periods when financial responsibilities are at their peak.
The extended protection duration, often up to 30-40 years, ensures your family remains secure throughout your income-generating years. It provides uninterrupted security during the phases when your family depends most on your financial support.
Easier Medical Underwriting and Approval
Younger applicants enjoy smoother policy approval processes due to better health profiles. This advantage of term life insurance means you are more likely to secure comprehensive coverage without exclusions or premium loadings associated with pre-existing conditions.
Early purchase also helps you lock in favourable terms before any health issues emerge. It ensures you receive the full spectrum of term plan benefits without medical limitations that might affect coverage later in life.
Financial Discipline and Comprehensive Protection
Investing in life insurance plans early shows financial maturity and helps in creating crucial money management habits. It ensures your dependents are protected from the very beginning of your financial journey and provides peace of mind that their future is secure. Using a term insurance premium calculator can help illustrate how much coverage you can afford at a young age. It will also clarify how early investment maximises both protection and value from your term plan.
The comprehensive benefits of term insurance plans make them an indispensable component of financial planning. From providing crucial life cover to offering tax advantages, term insurance plan benefits extend far beyond basic protection. Term insurance, especially when bought early, can make financial planning easy and provide unparalleled peace of mind regarding your loved ones’ future. Before you buy a policy, ensure that you have taken your needs into consideration.
FAQs About Term Insurance Benefits
Understanding Term Insurance Basics
i. What is the main purpose of term insurance?
The primary purpose of term insurance is to provide financial protection to your dependents in case of your untimely demise. Among the key benefits of term insurance is that it ensures your family can maintain their lifestyle, cover expenses, and achieve long-term goals even without your income.
ii. What distinguishes term insurance from other life insurance plans?
While traditional life insurance often combines protection with savings or investment components, term insurance focuses on providing a pure life cover. This singular focus is what makes term life insurance different in terms of affordability and coverage amount.
iii. What happens if I outlive my term insurance policy?
In a pure term plan, the policy expires without any payout if you survive the term. However, many term insurance plans offer a Return of Premium option, where all premiums paid are returned at maturity. This adds to the term plan benefits without compromising on protection.
Purchasing and Coverage Decisions
i. When is the ideal time to purchase term insurance?
The best time to buy term insurance is as early as possible once you start earning. The benefits of term insurance plans purchased at a young age include lower premiums, easier medical underwriting, and longer coverage duration during your family's most financially vulnerable years.
ii. How much coverage do I need through term insurance?
Adequate coverage should encompass your family's living expenses for at least 10-15 years, outstanding debts, future education costs, and other financial obligations. Using a term insurance premium calculator can help determine the optimal coverage amount based on your specific circumstances.
iii. Can I have multiple term insurance policies?
Yes, you can purchase multiple term insurance plans to meet evolving coverage needs. However, it is often more practical and cost-effective to opt for a single comprehensive policy that provides all the necessary term insurance benefits through an adequate sum assured and suitable riders.
Enhancing Protection and Understanding Features
i. What additional protections can I add to my term insurance?
Most life insurance plans allow you to enhance coverage through riders. These optional add-ons, available for an additional premium, provide term insurance benefits like critical illness coverage, accidental death benefit, and waiver of premium, creating a more comprehensive safety net.
ii. How does term insurance help with debt protection?
The death benefit can be used to pay off home loans, personal loans, or other liabilities. This ensures your family is not burdened with debt repayment in your absence.
Tax Benefits
i. What tax advantages come with term insurance?**
Term insurance premiums qualify for deduction under Section 80C of the Income Tax Act. The death benefit received by nominees is tax-exempt under Section 10(10D).
ii. Is the death benefit from term insurance taxable?**
No, the death benefit received from term insurance is completely tax-free under Section 10(10D) of the Income Tax Act, provided the policy meets specified conditions.
Policy Management and Claims
i. Can I make partial withdrawals from my term insurance?
Traditional term insurance plans do not allow partial withdrawals, as they are pure protection products. However, the death benefit is paid to nominees either as a lump sum or structured payments, depending on the chosen payout option.
ii. What happens if I miss premium payments?
Most life insurance plans offer a grace period for premium payments. If premiums remain unpaid beyond this period, the policy may lapse, resulting in loss of coverage. Some policies offer revival options to reinstate lapsed policies.
iii. How quickly are claims processed?
Most insurers process term insurance claims within 30 days of receiving all required documents. The simple nature of term insurance often contributes to faster claim settlement compared to more complex insurance products.
** Tax exemptions are as per applicable tax laws from time to time.
Customers 
Distributor 
Partner with Us 
Employee 
